At its board meeting June 12, FASB discussed a summary of
the comments received about the exposure draft of a proposed Accounting Standards
Update, “Fair Value Measurement (Topic 820): Deferral of the Effective Date of
Certain Disclosures for Nonpublic Employee Benefit Plans.” Also discussed was the
FASB staff’s analysis of the issues in light of stakeholder feedback received.
Based on this feedback, FASB made the following decisions:
- The board affirmed its proposal to indefinitely defer
certain disclosures for nonpublic employee benefit plans, with some
- Rather than define a new term, nonpublic employee
benefit plan, the Codification will be amended to describe the deferral as
applying to “any employee benefit plan other than those plans that are subject
to the Securities and Exchange Commission’s filing requirements”;
- Expanding the scope of investments to also include the
equity securities of nonpublic affiliated entities of the plan sponsor; and
- The deferral will be effective immediately upon issuance
of the final Accounting Standards Update, for all financial statements that
have not been issued.
According to the exposure draft, stakeholders had concerns
that certain disclosure requirements, effective for nonpublic entities for
annual periods beginning after December 15, 2011, would potentially provide
proprietary information about nonpublic entities through the dissemination of
their employee benefit plans’ financial statements on the regulator’s website.
The amendments mentioned in the exposure draft addressed
those concerns by permitting an indefinite deferral of certain quantitative
disclosure requirements for investments held by a nonpublic employee benefit
plan in its plan sponsor’s own nonpublic entity equity securities. This applies
to certain quantitative disclosure requirements for a nonpublic employee
benefit plan that holds investments in its plan sponsor’s own nonpublic entity
equity securities and are within the scope of the disclosure requirements
contained in FASB Accounting Standards Update No. 2011-04, “Fair Value
Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement
and Disclosure Requirements in U.S. GAAP and IFRSs.” This follows earlier
efforts by FASB that addressed the subject of fair value measurement (see “FASB
Relaxes Inactive Market Rules on Mark-to-Market Valuation” and “FASB
Kicks Off Fair Value Study”).
For efforts such as these, FASB was recently named
by PLANSPONSOR one of the top 20 institutions that have influenced or changed
the retirement industry over the last two decades (see “20 Institutional
Leaders for the Past 20 Years”).